1. Understanding Funds, Attributes and New Accounts
A discussion of fund accounting, the various fund groups, account structure and logic, account attributes including financial classifications and source of funds, procedures for opening an account and account flags
University of Miami
Controller’s Office
Updated March 2013
Mention that training includes case studies and class exercises on the various topics.

2. OBJECTIVES
Instruct departmental administrators on how to set up and manage their accounts
Help participants better understand the budgetary and fiduciary responsibilities of funds
Understand the basic structure and classification of accounts under Fund Accounting Principles
Demonstrate an understanding of the source of funds and functionality of accounts
Perform the necessary steps to successfully open new accounts at the University
Understand external/internal restrictions on using different account types
Need to have taken basic FRS and worked for the University longer than a year.

3. Fund Accounting
Allows University administrators to manage resources based on the different types of revenues received by the University
Internal University reports are on a fund accounting basis (Report 90s are based on fund accounting)
External financial statements are based on the accrual basis of accounting
The University prepares external financial statements based on the accrual basis of accounting. Therefore, as we close the books each fiscal year, we record payroll accruals, process all outstanding invoices dated May 31 and earlier and make entries for revenue deferrals and expense accruals.
Internal reports, such as monthly revenue and expense reports issued by account (R90s) are based on Fund Accounting.
In addition the University prepares an indirect cost proposal to the federal government we need to code University accounts in such a way that we can report to the government.

4. Definition Of A Fund A fund is:
An accounting entity with a self-balancing set of accounts used to record
Assets
Liabilities
A fund balance
Changes in fund balance (revenues and expenses)
Funds are used internally for reporting purposes. Used to record assets, liabilities, fund balances and revenues and expenditures.

5. Various Fund Groups
Non-Current Funds
Loan
Endowment
Annuity
Plant
Agency
Current Funds
Unrestricted General
Designated
Medical
Gables, Marine and South Campus
University of Miami Hospitals and Clinics
Anne Bates Leach Eye Hospital
Restricted
Sponsored
Gift
Focus of this section on funds will be on current funds which encompass (i.e. unrestricted, designated and restricted) and on the endowment and plant non-current funds.
Many of you are not involved with loan, annuity and agency funds. However, we will discuss what they are and the contact personnel for each.
Distinction between current and non-current funds
Current funds are used for regular ongoing annual operations of the University.
Non-current funds are for more permanent type activity.

6. Account Numbers Account Structure and Logic Link to Funds
Table shows fund information and account structure
Account Structure and Logic
SL account links to 1st digit of fund
GL account 2nd digit links to 1st digit of fund
Link to Funds
Fund #
Fund Description
Subsidiary ledger
(Revenues and Expenses)
Account Number 1st digit SL
General Ledger
(Assets, Liabilities, and Fund Balance)
Account Number
2nd digit
G/L 10
Unrestricted
1xxxxx
01xxxx 21
Designated –Medical
3xxxxx
02xxxx 22
Designated – Other
(Gables/RSMAS, South)
4xxxxx 23
Designated – UMHC
5xxxxx other than accounts that start with 500xxx
02xxxx other than 24
Designated – ABLEH
500xxx
025000 30
Restricted - Sponsored
6xxxxx
03xxxx 40
Restricted - Gift
7xxxxx
04xxxx 50
Loan
28xxxx
05xxxx 60
Endowment
26xxxx
06xxxx 70
Annuity
24xxxx
07xxxx 81
Plant – Unexpended
8xxxxx
08xxxx 82
Plant – Renewals &
Replacements 83
Plant – Retirement of Indebtedness 84
Plant – Investment in Plant 90
Agency
9xxxxx
09xxxx
Refer to page 15 in the manual for the chart on the fund and account number link.

7. Fund Group 10 Unrestricted - General
Activities recorded in fund group
Year-end balancing procedures – all accounts codes as unrestricted are pooled together for a school or department
Unrestricted include those economic resources of the University which are expendable for any purpose in performing the primary mission of the University - instruction, research, public service and patient care - and which have not been designated or restricted for other purposes.
Year end balancing - all accounts are pooled together for a school/department. The actual spent is compared to the budget. If a deficit results the department must cover by transferring funds from their plant reserves or from designated funds. If a surplus the department may choose to transfer to plant reserves if not transferred the surplus is added to:
the Provost funds for future programs - Gables
the Dean of the Marine Campus
the Dean of the Medical School
Threshold for earning interest is $10,000. Plant earns interest even though we are a not-for-profit organization in order to reward our savers with a little bit of interest. The interest is used to promote saving.

8. Fund Group 2x Designated
Activities captured in fund groups
Year end balancing of funds – pooled together
Two points of focus:
Funds in designated accounts can come from -
1. No donor restrictions but department wants to account for funds separately
2. Also can have some donor gifts that are not highly restricted and can qualify as designated (we will discuss this further in the next couple of slides)
Designated a department creates designated accounts to track revenues and related expenditures for the following types of revenue:
- Gifts received of a general nature for new or ongoing programs.
- Unrestricted income from endowment funds.
- Conferences sponsored by a department.
- Medical Service Agreements.
- Clinical and Hospital Activities
Year end balancing - All accounts coded as designated are pooled together for a school or department. The actual spent is compared to the revenues received. If a deficit the department must cover by transfer from plant reserve or unrestricted funds. If surplus department may transfer to plant reserve. If surplus not transferred then:
The funds are left in the account for future programs - Gables & Marine.
The funds are used to balance the overall School of Medicine budget. Special permission is required to use the funds in future years.
Please note that the transfer to plant account can be done in lump sum amount from one designated account and it does not need to be done account by account.

9. Distinction Between Asset Types “7R & 7U”
The asset type attribute is coded on “7” accounts as either R or U
7R - Restricted
7U - Designated
*Can see asset type attribute on screen 06A in FRS.
Prior to 1995 and the implementation of FAS 117 items in "7" accounts were not highly restricted. The University accounted for monies in the restricted gift fund 40 that now cannot be treated as restricted according to the new standard. In order not to close large numbers of restricted accounts the Controller's Office coded the chart of accounts (for accounts beginning prior to 1995) as asset type U for unrestricted and R for restricted. Subsequent to 1995 and the implementation of FAS 117 all new monies in "7" accounts fund 40 are restricted. Therefore a department may have a "7" accounts that are not highly restricted in nature in fund 40 if their start date is prior to 1995.
For external reporting these accounts are treated as unrestricted even though they are part of the restricted fund 40.
Refer to Restricted vs. Designated examples on page 8.

10. Fund Group 30 & 40 Restricted Sponsored/Non-sponsored
Activities captured in fund
Year end balancing-stands on its own
Gift
- Sponsored Fund 30 includes training grants, college work study, educational service agreements, and organized research.
SEE MANUAL PG 7 for criteria to determine whether funds received are sponsored.
- YE balancing - each account stands on its own and must not be in deficit at year end or any other time during the year.
- Gift Fund 40 funds restricted by donors or other outside agencies for highly specific purposes are accounted for as restricted funds.
Examples are certain scholarships and gifts to support Chairs' expenses.
- YE balancing - each restricted account stands on its own and must not be in deficit at year end or any other time during the year. Unless the receipt for funds is imminent a department should not overdraft a restricted account. The Controller's Office is charged with the responsibility of working with departments to ensure that overdrafts are temporary and covered by departments.
A gift is a non-reciprocal transfer. In other words, you give and do not demand receipt of something in return for giving.

11. Fund Group 50 Loan Fund
This fund group is used to account for resources available for loans to students
The funding sources for loan funds come primarily from government and donors
Loan funds are revolving funds. Thus as students repay loans, the repayment is placed back in the account. As a result, funds are again available to issue loans to other students
The Office of Treasury Operations is in charge of creating and managing loan funds at UM. Please contact the Accounting Manager in the Office of Treasury Operations if you have any questions.

12. Fund Group 60 And 70 Endowment & Annuity
Endowment and Similar Funds
Permanent
Term
Quasi
Annuity and Life Income Funds
Two points on endowments:
1) Permanent and term endowments are donor stipulated.
Quasi endowments are stipulated by departments.
Problem that's occurring is that departments want to move funds in quasi to permanent endowment and departments cannot decide this only DONORS can.
University administration, faculty and staff cannot earmark an otherwise unrestricted, designated or restricted gift as endowment.
2) These funds are set up to spin off income and the income will show up in your accounts unrestricted, designated and restricted depending on the underlying corpus of the endowment. Generally the spin off is to current funds. See memo on pages
Annuity departments receive monies from annuities when the annuity expires (death of annuitant or terms of agmt. met). Once the annuity expires the monies are distributed based on annuitant's request. Associate Treasurer coordinates the transfer of funds.

13. Fund Group 8x Plant Funds
Construction and renovation
Departmental equipment and surplus reserves
Activities captured
81 – Plant Unexpended
82 – Plant - Renewals & Replacements
Year end balancing procedures for funds
*Construction/renovation - the accounts are under the control of facilities administration.
*Departmental equipment/surplus reserves. Expenses cannot be charged to plant reserves. These accounts are set up when a department has excess funds in their unrestricted or designated accounts (restricted accounts cannot have surpluses transferred to plant). Unrestricted and designated surpluses are transferred to plant accounts for the purpose of earning interest. When funds from the account are needed to cover expenses and/or deficits in unrestricted and designated funds, a transfer from the plant account to the operating account is made rather than charging the expenses to the plant account. An exception is made for equipment purchases that can be charged to a reserve account. Therefore the only items that should appear in a departmental equipment/surplus reserve account are transfers and equipment charges.
CAVEAT - equipment charges allowed however, it would be better if you made the purchases from your 1, 3, 4, 5 or 7 account.
Year end balancing - Each plant account stands on its own and must not be in deficit at year end or any other time of the year. If a department has surplus reserves the funds are transferred to plant for investment purposes. The University cannot invest deficits. Plant reserve account is in deficit the Controller's office will transfer to unrest. or designated account. Facilities Admin. at Gables and Medical ensures that accounts for construction and renovation are not in deficit.

14. Fund Group 90 Agencies
Consists of resources held by the University as custodian or fiscal agent for others such as student organizations.
Restrictions:
Salaries may not be charged
Transfers may not be reflected
May not use UM’s federal or state sales tax ID #s
Year end balancing procedures
These funds are not owned by the University and are reported as liabilities.
YE balancing - Each agency account stands on its own and must not be in deficit at year end or any other time of the year.
The Controller's Office will after talking to the department transfer any deficits to an unrestricted or designated account.

15. What Is An Account?
A functional unit established for a specific purpose with one individual having primary responsibility for it
This functional unit is a collection of records which contain dollar data and descriptive data called attributes
Account Attribute screens are found in DMAS and FRS
1. Definition
functional unit, specific purpose, individual primary responsible for it, collection of records, dollar data
descriptive data (attributes)
2. Why do we need to have descriptive data in an account?
Because of the different types of reporting, we need to code accounts in such a way that allows us to issue accurate reports. We have rules for using accounts that must be followed.
We prepare internal and external financial reports.
Report 90's, Financial Statements, Tax Reports, Indirect cost proposal to the federal government, Reports to Sponsoring Agencies
3. Dollar Data
Have you ever thought that our accounts are really ten digits long?
Dollar transactions enter the accounting system via a ten digit code.
Do you need an object code to process a purchase requisition. The answer is yes. The system will reject the transaction if the ten digit account number is not coded. Our system stores dollar data at the ten digit account level.
Check requisition, business expense reimburse forms, purchase order requisitions need to have the ten digit number.
The originator of the transactions or the supervisor should be familiar with object codes and reflect the full ten digits in journal entries, requisitions, etc. Sub-object codes have a purpose defined in the controller’s office website.
Let's see what those four digit codes are. Remember that we need to use the four digits codes together with the six digit code to post dollars into our account numbers.

16. Account Attributes Account Responsible Person Type of fund (fund #)
Purpose of Account
Start/End date of account
Account title
Department – Sub Dept. Number
Asset type-restricted/unrestricted
Tax purpose
Financial Class
When we reviewed the definition of an account, we said that an account was a collection of records that contained two types of data. We just reviewed the dollar data stored in the ten digit account number. Do you remember the other type of data?
Descriptive data is assigned to an account based on the information submitted by the responsible person on the account request form.
Attributes allow us to group similar types of accounts for reporting purposes.
Most attributes are stored in a numerical format.
Our accounts have approximately 50 different attributes available for coding.
When we discuss the account request form later, you will see how we relate the information in the request form to the codes in the account attributes.
Elaine will discuss the account request form later.

17. Sub-Object Codes A listing and explanation is found in General Accounting Section of Controller’s web site
Revenues 0xxx
Balance Forward 0011
Conferences 006x
Student Union Fees 0091
Corporate Gifts 0231
Foundation Gifts 0232
Private Gifts 0233
Auxiliary 07xx
Expenditures
Direct Costs 1xxx-7xxx
Personnel Comp 1xxx
Fringe Benefits 2xxx
Operations 3xxx 4xxx 5xxx
Capital 6xxx
Transfers 7xxx
Indirect Costs 8xxx
Another major, standard, University-wide, detail, classification structure.
Subsidiary ledger account
Revenues and expenses
General Ledger account
Assets, liabilities and fund balance
Important for individuals primary responsible for accounts, designees, originator of transactions and supervisors: become familiar with revenues and expense sub-object code and their purpose. Visit the Controllers office web-site where descriptions and purpose of sub-objects are defined.
Object codes revenues and expenses - taxation issues are driven by the code - certain salaries are taxable others are not. Surveys, reporting done by object code. If you use the wrong code on personnel compensation - example for clinical faculty with medical malpractice - the doctors may not be insured. Another example is if the University hires a person to consult and the person needs a 1099 for taxes. They need to have the right code.
NO NO - some departments submit P.O.s and leave the object code blank. This does not make sense because they’ve budgeted the account and leave it to the discrepancy of another department to decide where to charge the acct. Please do not submit PO with the object code blank.
Easy to remember ranges on the expenditures categories. Revenues are more individualized.
Let's go to page 16 on the manual to review the general ledger object codes called account controls. Revenues and expense sub-objects are another account classification structure.
Pause and make a comparison before going to the next screen. Focus on the range of 1000 to 1999 on both account controls and sub-object codes.

18. Example Of Code Usage Account # Object Code 139759 1521 019759 1521
Salary expense transaction (recorded in the subsidiary ledger)
Prepaid asset transaction (recorded in the general ledger)
As mentioned before accounts whose leading digit is a zero are part of the general ledger. Therefore, any object code used with these account numbers are, by default, account control codes and update assets, liabilities and fund balance of the account.
Accounts whose leading digit is other than zero are part of the subsidiary ledger. Therefore, any object codes used with these account numbers are, by default, sub-object codes and update the revenues and expenses of the account.
Often departments do not enter the sub-object code when submitting requisitions. This is not a good idea. We have 950 sub-object codes to choose from.

19. Classification Structures
Fund
Sub-fund
Organizational Class
Campus
Asset Type
Tax Purpose
Financial Class
Classification structures are logical University-wide groupings of similar types of accounts. Each grouping is assigned a value that is used University-wide.
Some classification structures combine more than one level in the hierarchy of general to specific.
Fund is a two digit code in the descriptive data (attribute)of the account. As we mentioned before, fund is closely related to the source of funds. We reviewed the budgetary and fiduciary responsibilities defined for the various types of funds. The fund code links to the second digit of the GL account account number. Refer to page 15 of the manual. The fund code of an account can’t be changed.
Sub-fund. Logical groupings within a fund group. The sub-fund number consists of two digits. For example: The Loan fund has two sub-funds: federal and non-federal. The Endowment fund has three sub-funds: permanent, term, and quasi. The Sponsored fund has three sub-funds: federal, state, local, and private. For external and internal reporting, if we select all accounts with sub-fund 10 within fund 60, we can group all accounts that are permanent endowments.
The Organizational class structure has three levels in the hierarchy. Refer to page 20 of the manual to look at one example. Describe campus and sub-department while reviewing examples for Division /Dean/Department.
Asset types: U and R, another classification, described by Elaine when she discussed the Restricted Gifts fund.
The tax purpose classification structure only has three values. We use the tax purpose classification structure when we prepare the tax return form 990 for the University. The values are: P program services, M Management and General, F Fund raising.
Financial Classifications or Financial class is a major classification structure used to classify expenses for reporting purposes. Derived from the account purpose. Used in accounts that are coded to current funds: 10, 21, 22, 23, 24, 30, 40. Level I identifies the broad, general classification of Educational & General, Auxiliary Enterprises, & Patient Care. Level II identifies functional classifications within level I hierarchy.
Pause before going to next slide and summarize major classification concepts: different levels, different values.

20. Financial Class Structure
Level I
Educational and General
Auxiliary Enterprises
Patient Care
Financial Classification
The goal in sharing this information is for you to understand that the financial class attribute exists, that we have a structure with assigned values, that the values we select to code the account is based on the information you provide in the account request form. Refer to the manual on page 40. Discuss the three major classifications in the table.
Notice Auxiliary Enterprises. All accounts opened with the purpose of recording expenditures related to residence halls, food services, intercollegiate athletics, student unions, etc. will be coded as auxiliary enterprises. All expenditures in those accounts are reported as auxiliary enterprises. An auxiliary enterprise is an entity that exists to furnish goods or services to students, faculty or staff. Auxiliary enterprises charge a fee directly related to the cost of goods or services. Theses enterprises are meant to be self supporting.
Notice Student Services in the Educational & General category. When do we code an account student services, and when do we code an account auxiliary enterprises. Lets read the examples of accounts coded in the student services category. Turn to page 21 in the manual. Student newspaper, student organizations, cultural events, student activities are coded in this category.

21. Source Of Funds Program Revenues Registration Fees
Private, Corporate and Foundation Gifts
Special Academic Programs
The source of funds establishes where the resources are being obtained from to fund the account being established. The following are examples of sources

22. Determining What Account To Create
What is the funding source?
What is the account going to be used for?
Is the funding unrestricted, restricted, designated or other?
What is the financial classification of the account?
When creating an account you need to ask yourself the following:

23. Account Create Forms
You can find the Account Creation forms for these type of accounts on the Controller’s Office Forms page:
Unrestricted Restricted Designated
Plant
Agency
Obtain a new account request form. The forms are found on the Controller's web page under forms and letters.
Walk participants through the actual forms in the Appendix starting on page

24. Account Flags Frozen Flag Delete Flag
Transactions will not post to the account unless there is an outstanding open commitment for the item.
All other transactions will default to a suspense account for further research
Frozen Flag
Delete 1 Status – all open commitments have cleared
Delete 2 Status – at the end of the 2nd fiscal year the account will be purged and can only be viewed in DMAS
Delete Flag
The accounting system FRS account can be frozen or deleted by written request of a department.
Sponsored accounts are "frozen" programmatically three months after the account end date.
Reasons for placing an account on frozen or delete status:
1) purpose no longer valid
2)term of program or award expired
3)funds or funding source has been used up
4)project was completed
5)controller's freezes account because it's in DEFICIT
System updates overnight.
**For closing an account contact Assistant Director of General Accounting.

25. Summary Call the Controller’s Office
What are unrestricted, restricted, designated or other type accounts
What are the budget implications based on the type of account I have set up
What is the funding source and account purpose
Where do I go to find help with the account create process
Make note that we have a frequently asked questions section FAQ on page 38.
Mention page 25 on Understanding the Account Purpose. And the reason it is extremely important to keep the integrity of the account’s purpose intact.
Call the Controller’s Office
at if you have any follow up questions